Labour market policy with a small and shrinking state: the case of the UK Damian Grimshaw Paris seminar: LABOUR MARKET POLICY IN EUROPE: FACING THE ECONOMIC.

Similar presentations

Presentation on theme: "Labour market policy with a small and shrinking state: the case of the UK Damian Grimshaw Paris seminar: LABOUR MARKET POLICY IN EUROPE: FACING THE ECONOMIC."— Presentation transcript:

1
Labour market policy with a small and shrinking state: the case of the UK Damian Grimshaw Paris seminar: LABOUR MARKET POLICY IN EUROPE: FACING THE ECONOMIC CRISIS May 2011

9
Centre-left government 1997-2010 General goal of attaining a European level of public services provision March 2010 budget included planned spending cuts of approximately 13% over 10 years Right-wing coalition Since May 2010 Rolling back the state to the level of the USA October 2010 budget includes spending cuts of approx 20% over 5 years Spending cuts data from Taylor-Gooby and Stoker (2011)

10
Large and rapid cut in UK public spending (% of GDP) – projected lower than the US by 2015 (IMF data, www.imf.org/external/pubs/ft/weo/2010/02/weodata)

17
Policy responses reinforce the pressure of negative incentives on the supply-side Policy changes: New index reduces value of benefits – Switch in April 2011 from RPI (includes housing costs) to CPI. – Estimated savings £5.8 billion by 2014-15. Affects 5 million people on out-of-work benefits 3-year freeze in working tax credit and child benefits (April 2011-14) and reduced help with childcare costs (from 80% to 70%) Planned reforms to simplify system (universal credit)- no losers claim but only after cuts Reinforced means-testing alongside minor reduction in claw back rate (disability benefits means tested after one year/ end in 2013 to child benefits for higher rate tax-paying families) Reinforced welfare-to-work pressure for all, including disabled and lone parents with very young children Capping of benefits- housing benefits plus total support- impact on poor in London and large families Significance: Huge cuts in welfare spending hurt the poorest (presented by govt as a sensible trade-off for smaller cuts in public services) Changed inflation indexation represents one third of total £18 billion cut in welfare spending Towards withdrawal of unconditional support for incapacitated End to universal child benefits- in place since Beveridge End to universal housing support for those on benefits

18
Example of incapacity benefits Reforms since 2003 have increased obligations on people on incapacity benefits to move into the labour market (to enter paid work or to be seeking paid work) Culminated in 2008 with a new means-tested benefit, Employment and Support Allowance, which requires a new work assessment test (previous benefits and income support gradually being abolished during 2010-14) 2010 budget abolished mobility allowance for people in care -Concerns that new health test does not identify mental health problems (mind.org.uk), is not sensitive to the needs of cancer patients (citizensadvice.org.uk) and is largely designed to push tens of thousands more people onto job-seekers allowance (benefitsandwork.co.uk) -Historic protest of thousands of disabled people in London, May 2011

20
It has lost real value since early 2010 (relative to RPI) but has kept up with average and median earnings (increases of 1-2% since October 2009)

21
Reduced employee security measures Ongoing changes as part of Employment Law Review (summer 2010): Worsening of job quality: Abolished two-tier code that protected pensions and employment conditions of staff transfers (mostly low paid) in local authority and health services outsourcing Weakened rights to claim unfair dismissal - Proposal to increase the qualifying period from 12 months to 24 months – Largest impact on youth, ethnic minorities and female part-time workers (TUC data) Proposal to reduce the minimum 90-day period consultation period for collective redundancies Plans to reduce protections under TUPE legislation Reversed previous governments promise to introduce dual discrimination provision in the Equality Act Improvements: Proposal to consult over pre-2010 promises to extend the right to request flexible working and introduce more generous and shared parental leave, but only from 2015

25
4. Integration through education & training -- Reducing the already weak commitment to learning 2006 Train to Gain provided government subsidies to employers to support training to NVQ Level 2 – judged relatively effective – But new government abolishes train to gain and related subsidies (from July 2011 no entitlement to free training to level 2 for people aged 25+) – 25% reduction over 4 years in budgets for further education colleges that provide much of the Level 2 and 3 training April 2010 – new employee right to request time to train in firms with 250+ employees – But new government has scrapped previous plans to extend the new right to all firms Means-tested education maintenance allowance (up to £30 per week) to support 16-19 year olds in further education – abolished in England from Jan 2011 Continued problems of negative set of mutually reinforcing factors shaping low skill employment (Keep and James 2010; see also Pring et al. 2009)

27
Integration through public sector employment -- Unprecedented downsizing of public sector jobs Public sector provided employment shelter during the recession 2010 budget projected 490,000 job cuts by 2014-15 – already 132,000 jobs lost (2009 Q4 to 2010 Q4) Half million people protested in March 2011 Pay freeze 2011-13 for all public sector (small annual supplement of up to £250 for lowest paid, equivalent to 2% for lowest paid Heather Wakefield PFblog ) (local government pay already frozen from April 2010)

28
Job cuts have started and will continue Loss of public sector jobs:Spread across all areas: Inclusion of nationalised banks in 2008 Q4 onwards Source: statistics.gov.uk

29
SUMMARY Up to 2010 the UK witnessed positive activation measures and improvements in worker rights, albeit limited by international standards Radical strengthening of neoliberal policy orientation in all 5 dimensions of labour market policy: – Labour supply – reduced benefits and stronger welfare-to-work incentives, especially targeted on disabled and lone parents – Labour demand/job quality – no improvement in minimum wage, proposed weakening of employee security – Employment assistance – cancellation of several job subsidy programmes puts young people at greater risk when unemployment still high – Education&training – abolished flagship train-to-gain programme and means-tested payment to 16-18 year olds in education – Public sector employment – at the start of a period of large job cuts with a pay freeze and proposed reductions in protection of outsourced workers